Dollar Delights; 1. in Jumby Bay, Antigua, Property Can Be as Cheap as the US Because of the Weak Dollar 2. Quebec, Canada, Is Popular with UK Buyers

The Evening Standard (London, England), March 26, 2008 | Go to article overview

Dollar Delights; 1. in Jumby Bay, Antigua, Property Can Be as Cheap as the US Because of the Weak Dollar 2. Quebec, Canada, Is Popular with UK Buyers


Byline: LORNA BURKE

Buying in the US

WITH the dollar so weak against the pound, buying in the United States ischeap. A property priced at $600,000 that would have cost [pounds sterling]375,000 five yearsago, when the dollar stood at $1.60 to the pound, works out at just [pounds sterling]295,000today with the exchange rate at $2.03.

Plus, there is a good chance that the same property will still be valued ataround its 2003 level.

The US market is probably the only one where mortgage finance is assophisticated as in the UK, so it is easy to arrange one through a US bank, andterms and conditions are very similar to the UK.

Buying costs are very similar, too, so budget for between three and five percent, including taxes. Lawyer's fees will be between 0.5 and one per cent,while transfer tax varies depending on the location of the property, rangingfrom 0.01 per cent in Colorado to two per cent in Delaware.

"Mortgage interest rates are cheaper if you borrow from an American bank andyou will pay around 4.3 per cent for a variable rate loan, or 5.6 per centfixed for five years," says Mike Boles of Savills Private FinanceInternational, which specialises in loans on foreign properties.

"Mortgage fees are around one per cent of the amount borrowed and maximum loanstend to be around 75 per cent of the property's value." If you rent out theproperty, either as a holiday home or long term, you will pay US income tax atrates starting at 10 per cent on income of $8,025 a year, rising to 35 per centon income in excess of $375,000. You will also be liable for income tax in theUK but tax paid in the US can be offset against your UK liability.

When you come to sell you will be liable for capital gains tax at rates ofbetween 10 per cent and 25 per cent, depending on the amount of profit made,and there is 10 per cent withholding tax to ensure that you pay what is due.Here again, tax paid in the US can be offset against your UK liability, and asa UK resident you are liable for CGT on the sale of any assets worldwide. …

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